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A Forrester Total Economic Impact™

Study Commissioned By Zendesk

May 2017

The Total Economic Impact™ Of Zendesk

Table Of Contents Executive Summary 1

Key Findings 1

TEI Framework And Methodology 3

The Customer Experience 4

The Zendesk Customer Journey 5

Interviewed Organizations 5

Composite Organization 5

Financial Analysis 6

Increased Efficiency Of Agents 6

Deflected Customer Interactions 7

Improved Agent Experience And Retention 8

Avoided Cost Of Maintaining Previous Platform 9

Avoided License Cost Of Previous Software 10

Unquantified Benefit 10

Cost Of Zendesk License 11

Cost Of Implementation 11

Cost Of Incremental (Optional) Projects 12

Financial Summary 13

Zendesk: Overview 14

The Zendesk Family 14

Appendix A: Chat Boosts Customer Conversions 15

Appendix B: Total Economic Impact 16

Project Director:

Dean Davison

May 2017

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1 | The Total Economic Impact™ Of Zendesk

Executive Summary

Zendesk commissioned Forrester Consulting to conduct a Total Economic

Impact™ (TEI) study and examine the potential return on investment (ROI)

that organizations may realize by utilizing Zendesk’s customer support

products to improve handling customer interactions.

The purpose of this study is to provide readers with a framework to

evaluate the potential financial impact of Zendesk on their organizations.

To better understand the benefits, costs, and risks associated with a

Zendesk implementation, Forrester interviewed seven organizations with

experience using Zendesk’s customer support products.

Prior to Zendesk, the organizations used a variety of cloud-based software

tools. The director of customer care at one company told Forrester: “Our

previous tool lacked the ability to make changes and adapt on the fly. That

particular tool was very cumbersome to make fields and system changes.

Something as simple as that oftentimes required developer knowledge to

get that accomplished.” Another director said: “What we didn’t have with

our previous tool was a way to streamline telephony delivery. We had

three different call centers, and each had their own phone numbers and

phone setups.”

After implementing Zendesk, another executive said: “Using Zendesk

made it a lot easier for us to grow and add on locations, diversify for a little

disaster recovery, and to make it seamless to the customer. We very

carefully track customer satisfaction from customer calls, and within the

first nine months of implementing Zendesk, we realized an 8-point

increase on a 100-point scale.”

Key Findings

Quantified benefits. The following risk-adjusted present value (PV)

benefits are representative of those experienced by the companies

interviewed:

› Increased efficiency of agents. Using Zendesk, the organization

streamlined interactions with customers through automated responses to

20% of emails and a reduced length for the average customer phone

call. These improvements affected tens of thousands of interactions and

avoided the need to hire headcount, resulting in a cumulative savings of

more than $1.2 million.

› Deflected customer interactions. The organization used Zendesk to

deflect interactions to self-service and to lower-cost channels such as

chat. By the end of three years, the organization deflected 15% of

interactions to chat and 20% to self-service, for a total savings of

$686,490.

› Improved agent experience and retention. Zendesk was a more user-

friendly tool that allowed agents to focus on solving customer problems

rather than managing multiple, nonintuitive screens and older call

tracking systems. The organizations experienced an improvement in

both retention and recruiting of agents, avoiding costs of $287,304.

› Avoided cost of maintaining previous platform. The previous

platforms used by the organizations required more system

administration and ongoing maintenance than Zendesk. By moving to

Zendesk, the organization avoided these costs and saved $708,753.

Benefits And Costs

Increased efficiency of agents:

$1,254,567

Deflected customer interactions:

$686,490

Total costs:

$770,763


› Avoided license cost of previous software. By not renewing the

license for the previous software platform, the organization no longer

incurred this cost. The savings totaled more than $250,000 each year

and $837,548 over three years.

› Increased conversion rates engaging over chat. Organizations that

used chat during the sales process found that customers were more

willing to engage and that conversion rates increased. Although

quantified, this benefit is excluded from the ROI calculation (see

Appendix A).

Costs. The interviewed organizations experienced the following risk-

adjusted PV costs:

› Cost of Zendesk license. The fees paid to Zendesk assumed 100

agents that grew by 20% annually. The license fees include a weighted

average that combines Zendesk Support (Enterprise edition), plus

phone and chat capabilities for different types of customer interactions.

The license fees paid to Zendesk totaled $615,633.

› Cost of implementation. Implementing Zendesk required an internal

team of four employees, applying half of their effort to the project, for a

total of six weeks. The cost of this setup was $24,570.

› Cost of incremental (optional) projects. Some of the organizations

also funded special projects to enhance the functionality and improve

the agent usability and experience. On average, the cost for these

improvements was $50,000 per year, or a risk-adjusted $130,560 over

three years.

Forrester’s interviews with seven existing customers and subsequent

financial analysis found that an organization based on these interviewed

organizations experienced benefits of $3.8 million over three years versus

costs of $770,763, adding up to a net present value (NPV) of $3 million

and an ROI of 390%.

Total benefits PV,

$3.8M

Total costs PV, $771K

Initial Year 1 Year 2 Year 3

Financial Summary

Payback:3 months

$1.3M

$686.5K

$287.3K

$708.8K$837.5K

Increasedproductivity of

agents

Cost savingsfrom

deflectinginteractions

Improvedagent

experienceand retention

Avoided costof maintaining

previousplatform

Avoidedlicense costof previous

supportcenter

software

Benefits (Three-Year)

ROI 390%

Benefits PV $3.8 million

NPV $3 million

Payback 2.9 months


TEI Framework And Methodology

From the information provided in the interviews, Forrester has constructed

a Total Economic Impact™ (TEI) framework for those organizations

considering implementing Zendesk.

The objective of the framework is to identify the cost, benefit, flexibility,

and risk factors that affect the investment decision. Forrester took a

multistep approach to evaluate the impact that Zendesk can have on

an organization:

DUE DILIGENCE

Interviewed Zendesk stakeholders and Forrester analysts to gather data relative to Zendesk.

CUSTOMER INTERVIEWS

Interviewed seven organizations using Zendesk to obtain data with respect to costs, benefits, and risks.

COMPOSITE ORGANIZATION

Designed a composite organization based on characteristics of the interviewed organizations.

FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewed organizations.

CASE STUDY

Employed four fundamental elements of TEI in modeling Zendesk’s impact: benefits, costs, flexibility, and risks. Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix B for additional information on the TEI methodology.

The TEI methodology

helps companies

demonstrate, justify,

and realize the

tangible value of IT

initiatives to both

senior management

and other key

business

stakeholders.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by Zendesk and delivered by Forrester Consulting.

It is not meant to be used as a competitive analysis.

Forrester makes no assumptions as to the potential ROI that other

organizations will receive. Forrester strongly advises that readers use their own

estimates within the framework provided in the report to determine the

appropriateness of an investment in Zendesk.

Zendesk reviewed and provided feedback to Forrester, but Forrester maintains

editorial control over the study and its findings and does not accept changes to

the study that contradict Forrester’s findings or obscure the meaning of the

study.

Zendesk provided the customer names for the interviews but did not participate

in the interviews.


The Customer Experience

The experiences of the seven companies interviewed parallel findings in Forrester’s published research:

“To provide friction-free customer service experiences, [companies] must tap into technologies that enable

communications with customers over voice, digital, and social channels. Ideally, those technologies also

deliver contextual content to employees so they can answer customer questions, deliver proactive and

personalized service using analytics-derived insights, and listen and react to the voice of the customer.

[Companies] increasingly must look at these technologies as part of a business technology (BT) agenda

that focuses on technologies that organizations design to win, serve, and retain customers. These

technologies fall into five functional areas:

› “Omnichannel communication. These applications support the business processes for interacting with

customers over voice, electronic, and social communication channels.

› “Knowledge management. These applications help you identify, create, review, publish, and maintain

multimedia content, including video, which allows customer service agents to answer customers’

questions and enables customers to find answers to their questions via web self-service portals.

› “Agent desktop solutions. This category comprises applications that agents use to create and manage

incidents (cases) in response to customer inquiries.

› “Customer service analytics. This category comprises analytics that organizations use to deliver an

optimal service interaction that targets the persona of the customer and the issue at hand. Technologies

include next-best-action and interaction analytics.

› “Voice of the customer. This category comprises applications that organizations use to gather structured

and unstructured feedback from social media sites.”


The Zendesk Customer Journey

BEFORE AND AFTER THE ZENDESK INVESTMENT

Interviewed Organizations

For this study, Forrester conducted seven interviews with Zendesk

customers. Interviewed customers include the following:

Composite Organization

Based on the interviews, Forrester constructed a composite organization

to serve as the basis for building a financial model. The assumptions on

which the financial model is based and that drive the remaining analysis

are an organization with the following characteristics:

› Manages a support center for both purchases and customer questions.

› Employs 100 support agents.

› Historically, focuses on phone and email interactions.

› Is rapidly expanding chat as a significant channel.

› Provides support in four languages.

› Seeks to deflect the maximum number of customer inquiries to self-

service.

› In the first year of Forrester’s financial model, the customer

engagements are spread across the following channels:

o 50% phone; declining by 10% per year.

o 35% email; remaining constant.

o 5% chat; increasing 5% per year.

o 10% self-service; growing 5% per year.

INDUSTRY INTERACTION TYPES CHANNELS NUMBER OF AGENTS

Footwear and apparel manufacturer

Incoming product orders, customer support, support for in-store purchases

Telephone, email, chat 70

Transportation specialty firm

Incoming product orders, customer support for existing orders

Telephone 250

Financial services provider

Outbound customer solicitation, facilitate customer through extended purchase process, collections, customer support

Telephone, email, chat 240

Internet publishing platform

Incoming customer support Telephone, email 350

Relocation services provider

Outbound customer solicitation, inbound customer scheduling

Email 15 to 20 (changes due to extreme seasonality)

Email marketing provider Incoming customer support Telephone, email, chat 260

Apparel eCommerce provider

Incoming product order, eCommerce customer support, talent/artist relations

Email, chat, phones in Europe, social media

25 internal agents; additional 75 outsourcing vendors

“Using Zendesk made it a lot

easier for us to grow and add

on locations, diversify for a

little disaster recovery, and to

make it seamless to the

customer.”

Customer engagement director,

financial services provider


Financial Analysis

QUANTIFIED BENEFIT AND COST DATA AS APPLIED TO THE COMPOSITE

Increased Efficiency Of Agents

Each of the organizations reported improvements in agent productivity

when migrating from another tool to Zendesk (except for the startup,

which had no previous tool). Specifically, the organization reported:

› A 15-second improvement in the average call duration during the

first year and a 25-second improvement in the second and third

years (based on an average call length of 500 seconds prior to

using Zendesk).

› The ability to use autoresponders to handle 20% of the incoming email.

› A reduced need for dozens of agents.

The increase in productivity realized will vary based on the current

productivity of agents. To account for this risk, Forrester adjusted this

benefit downward by 15%, yielding a three-year risk-adjusted total PV of

more than $1.2 million.

The table above shows the total of all benefits across the areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the composite organization expects risk-adjusted total benefits to be a PV of more than $3.5 million.

Total Benefits

REF. BENEFIT YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT

VALUE

Atr Increased efficiency of agents $411,825 $523,260 $595,935 $1,531,020 $1,254,567

Btr Deflected customer interactions

$116,280 $268,898 $477,233 $862,410 $686,490

Ctr Improved agent experience and retention

$95,760 $111,720 $143,640 $351,120 $287,304

Dtr Avoided cost of maintaining previous platform

$285,000 $285,000 $285,000 $855,000 $708,753

Etr Avoided license cost of previous software

$280,800 $336,960 $404,352 $1,022,112 $837,548

Total benefits (risk-adjusted) $1,189,665 $1,525,838 $1,906,160 $4,621,662 $3,774,662


Deflected Customer Interactions

The interviewed organizations were able to increase deflection of

interactions to self-service and also shift interactions to lower-cost

channels, especially chat. For the financial model, Forrester assumed that

over three years:

› Self-service interactions reached 20% of the total.

› An increased number of interactions shifted to chat. Agents can

typically handle several customers at the same time, which

dramatically increased efficiency. Forrester used a conservative

efficiency improvement of 25% for the model.

› More customers became willing to engage over chat, which also

increased the number of interactions.

› Because all organizations are shifting toward chat and self-service,

Forrester attributed 50% of the benefit to the unique capabilities of

Zendesk that make this transition more effective.

The savings in the first year carried over into future years and resulted in a

PV savings $807,636 over three years.

The degree of deflection and the savings for each deflection will vary widely,

and we encourage readers to adapt this section using their own data. To

compensate, Forrester risk-adjusted the benefit downward by 15%, resulting

in a total three-year PV benefit of $686,490.

Increased Efficiency Of Agents: Calculation Table

REF. METRIC CALC. YEAR 1 YEAR 2 YEAR 3

A1 Number of agents 20% growth 100 120 144

A2 Percent of interactions via phone 50% 40% 30%

A3 Average call duration (seconds) Initially 500

seconds 485 460 435

A4 Performance improvement of phone interactions

A1PY-A1CY /A1PY -3% -5% -5%

A5 Impact on agent productivity (avoided FTEs) A1*A2*A4 1.5 2.4 2.2

A6 Percent of interactions via email 35% 35% 35%

A7 Performance improvement on email interactions using autoresponders

20% 20% 20%

A8 Impact on agent productivity (avoided FTEs) A1*A6*A7 7.0 8.4 10.1

A9 Total FTEs saved A5+A8 8.5 10.8 12.3

A10 Average burdened salary $57,000 $57,000 $57,000

At Increased efficiency of agents A9*A10 $484,500 $615,600 $701,100

Risk adjustment ↓15%

Atr Increased efficiency of agents (risk-adjusted) $411,825 $523,260 $595,935

Deflected customer Interactions deflected to

lower cost channels: 18% of total benefits

18%

three-year benefit PV

$686,490


Improved Agent Experience And Retention

Some of the companies experienced a reduction in turnover of agents by

using Zendesk as a consolidated tool set for managing interactions with

customers. Forrester’s interviews showed:

› One customer reported a decrease in agent turnover of more than

20%, but Forrester uses a more conservative value of 15% in the

financial model.

› The reduction in agent turnover was part of a broader program to

improve the retention of agents, so Forrester attributes 40% of the

improvement to Zendesk.

› As a result, the organization avoided the need to hire a total of 55

agents over three years.

› The cost to hire and train an agent averages 35% of an agent’s annual

salary of $57,000.

The resulting savings over three years of reducing the need to hire and train

agents was $359,130.

Because not all the companies that Forrester interviewed reported an

improvement in the agent experience, Forrester reduced the value of this

benefit by 20%. The risk-adjusted PV savings over three years totaled $287,304.

Deflected Customer Interactions: Calculation Table


B1 Number of agents 100 120 144

B2 Percent of interactions as chat Initially 0% 5% 10% 15%

B3 Performance improvement on interactions over chat

25% 25% 25%

B4 Increase in customer interactions due to having the chat channel available

+20% +30% +35%

B5 Impact on agent productivity using chat (avoided FTEs)

B1*(B2CY-B2CALC) *B3*(1-B4)

1.0 2.1 3.5

B6 Percent of interactions deflected to self-service

Initially 5% 10% 15% 20%

B7 Performance improvement on interactions via self-service

75% 75% 75%

B8 Impact on agent productivity from self-service (avoided FTEs)

B1*(B6CY-B6CALC) *B7

3.8 9.0 16.2

B9 Total FTEs saved B5+B8 4.8 11.1 19.7

B10 Average burdened salary $57,000 $57,000 $57,000

B11 Percent attributed to Zendesk 50% 50% 50%

Bt Deflected customer interactions B9*B10*B11 $136,800 $316,350 $561,450


Btr Deflected customer interactions (risk-adjusted)

$116,280 $268,898 $477,233

Improved agent experience and retention: 8% of

total benefits

8%

three-year benefit PV

$287,304


Avoided Cost Of Maintaining Previous Platform

To support the previous agent platform, each organization employed

staff or maintained a retinue of consultants. In addition, the

organizations paid an average of $150,000 per year for additional

requests, features, upgrades, and related charges paid to the vendor.

By moving to Zendesk, the burden typically required less than one

person, and in several of the interviews, the directors told us that they

themselves performed the work. The organizations paid additional

fees for consultants to design, implement, or manage specific features

or capabilities for the previous tools.

The cost for two system administrators at $110,000 each per year and the

additional fees totaled $900,000 over three years. Forrester risk-adjusted

and reduced the benefit by 5%, resulting in a PV benefit of $708,753.

Impact risk is the risk that the business or technology needs of the organization may not be met by the investment, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for benefit estimates.

Improved Agent Experience And Retention: Calculation Table


C1 Total number of agents 100 120 144

C2 Reduced turnover number of agents leaving 15% 15 18 22

C3 Reduced number of agents leaving that is attributed to using Zendesk

40% 6 7 9

C4 Averaged burdened salary $57,000 $57,000 $57,000

C5 Average cost to recruit and train a new agent C4*35% $19,950 $19,950 $19,950

Ct Improved agent experience and retention C3*C5 $119,700 $139,650 $179,550


Ctr Improved agent experience and retention (risk-adjusted)

$95,760 $111,720 $143,640

Avoided Cost Of Maintaining Previous Platform: Calculation Table


D1 Two system administrators $110,000/year/

person $220,000 $220,000 $220,000

D2 Additional fees and services $80,000 $80,000 $80,000

Dt Avoided cost of maintaining previous platform D1+D2 $300,000 $300,000 $300,000


Dtr Avoided cost of maintaining previous platform (risk-adjusted)

$285,000 $285,000 $285,000


Avoided License Cost Of Previous Software

By avoiding a renewal of the previous software platform, which averages

two to three times the cost of Zendesk, the organization saved more than

$1.1 million. Forrester risk-adjusted and reduced the benefit by 10%. The

risk-adjusted PV benefit was $837,548 over three years.

Unquantified Benefit

The composite organization realized additional benefits that Forrester did

not include in the financial analysis. In many cases, the organizations

lack accurate ways to measure these benefits, but the impact is still

recognized.

› Flexibility with the APIs. One executive told Forrester: “We definitely

needed the ability to leverage the APIs. With our previous tool, we

were paying for a lot of excess API use, and some of the early

questions for Zendesk were, ‘What are our limits?’ and ‘How can we

configure our tools to communicate?’”

The same executive continued: “We have a lot of sensitive documents

and other things that were being stored in our previous tool that we

wanted to move out into our own document service platform and then

fall into Zendesk at will, more or less.”

Avoided License Cost Of Previous Software: Calculation Table


E1 Number of agents 100 120 144

E2 License cost of previous solutions $260/agent/month $312,000 $374,400 $449,280

Et Avoided cost of maintaining previous platform = E2 $312,000 $374,400 $449,280


Etr Avoided cost of maintaining previous platform (risk-adjusted)

$280,800 $336,960 $404,352


Cost Of Zendesk License

Zendesk offers a number of pricing tiers for its support product,

including the Enterprise license evaluated in this study. Additional fees

provide access to functionality such as chat and phone capabilities.

Among the companies that Forrester interviewed, the firms adopted

different pricing for different teams of support agents. For example, a

collections group did not need chat capabilities. The pricing information

in the study uses the Zendesk list price for its Support, Chat, and Talk

was a PV of $615,633 over three years.

Cost Of Implementation

The organizations spent six weeks implementing Zendesk. The

composite organization converted its history of support tickets into the

Zendesk environment. One organization avoided converting old

tickets and was able to go live with Zendesk in just three days, but

this did not seem typical. On average, companies assigned four

employees to the project for six weeks for about 50% of their time.

The resulting cost was $23,400. Forrester risk-adjusted the cost

upward by 10%, resulting in a total PV cost of $24,570.

Total Costs

The table above shows the total of all costs across the areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the composite organization expects risk-adjusted total costs to be a PV of $770,763.

Implementation risk is the risk that a proposed investment may deviate from the original or expected requirements, resulting in higher costs than anticipated. The greater the uncertainty, the wider the potential range of outcomes for cost estimates.

REF. COST INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT VALUE

Gtr Cost of Zendesk license $0 $206,400 $247,680 $297,216 $751,296 $615,633

Htr Cost of implementation $24,570 $0 $0 $0 $24,570 $24,570

Itr Cost of incremental (optional) projects

$0 $52,500 $52,500 $52,500 $157,500 $130,560

Total costs (risk-adjusted)

$24,570 $258,900 $300,180 $349,716 $933,366 $770,763

Cost Of Zendesk License: Calculation Table

REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3

G1 Number of support agents 20% growth 100 120 144

G2 Average cost per agent per year $172/month $2,064 $2,064 $2,064

Gt Cost of Zendesk license $206,400 $247,680 $297,216

Risk adjustment 0%

Gtr Cost of Zendesk license (risk-adjusted)

$206,400 $247,680 $297,216


Cost Of Incremental (Optional) Projects

The organizations told Forrester that they funded additional capabilities,

some of which improved the agent experience, provided additional

functionality, or even expanded the core language modules. Executives

considered most of these projects as optional, but each improved the

results realized from using Zendesk. The cost was $50,000, and

Forrester risk-adjusted the cost upward by 5%, resulting in a total PV

cost of $130,560 over three years.

Cost Of Implementation: Calculation Table


H1 Four employees for 50% of time 2

H2 Six weeks (in years) 0.13

H3 Average burdened salary $90,000

Ht Cost to implement Zendesk H1*H2*H3 $23,400

Risk adjustment 10%

Htr Cost of implementation (risk-adjusted)

$24,750

Cost Of Incremental (Optional) Projects: Calculation Table


I1 Consulting for special functionality $50,000 $50,000 $50,000

It Incremental projects to improve agent experience

=I1 $50,000 $50,000 $50,000

Risk adjustment 5%

Itr Cost of incremental projects (risk-adjusted)

$52,500 $52,500 $52,500


Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

-$1.0 M

-$0.5 M

$0.5 M

$1.0 M

$1.5 M

$2.0 M

$2.5 M

$3.0 M

$3.5 M

$4.0 M

Initial Year 1 Year 2 Year 3

Cashflows

Total costs

Total benefits

Cumulative net benefits

The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.

These risk-adjusted ROI,

NPV, and payback period

values are determined by

applying risk-adjustment

factors to the unadjusted

results in each Benefit and

Cost section.

Cash Flow Table (Risk-Adjusted)

INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT

VALUE

Total costs ($24,570) ($258,900) ($300,180) ($349,716) ($933,366) ($770,763)

Total benefits $0 $1,189,665 $1,525,838 $1,906,160 $4,621,662 $3,774,662

Net benefits ($24,570) $930,765 $1,225,658 $1,556,444 $3,688,296 $3,003,899

ROI 390%

Payback period 2.9 months


Zendesk: Overview

The following information is provided by Zendesk. Forrester has not validated any claims and does not

endorse Zendesk or its offerings.

Zendesk builds software for better customer relationships. It empowers organizations to improve customer

engagement and better understand their customers. Zendesk products are easy to use and implement.

They give organizations the flexibility to move quickly, focus on innovation, and scale with their growth.

Zendesk was built upon a simple idea: Make customer service software that’s easy to use and accessible

to everyone. The company has expanded on that idea and now offers a growing family of products that work

together to improve customer relationships. These products can be embedded and extended through an

open development platform.

The Zendesk Family

Zendesk provides a family of products that helps organizations understand their customers, improve

communication, and offer support where and when it’s needed most.

Zendesk Support

A beautifully simple system for tracking,

prioritizing, and solving customer

support tickets

Zendesk Message

Message software that helps

companies engage customers

on their favorite messaging apps

Zendesk Guide

A self-service destination featuring

knowledge base articles, community

forums, and a customer portal

Zendesk Connect

Customer intelligence software

built for targeted campaigns and

proactive engagement

Zendesk Talk

Call center software that allows for

more personal and productive phone

support conversations

Zendesk Explore

Analytics to help measure and

understand the entire customer

experience

Zendesk Chat

Live chat software that provides a fast

and responsive way to connect with

customers in the moment

More than 100,000 paid customer accounts in over 150 countries and territories use Zendesk products. Based

in San Francisco, Zendesk has operations in the United States, Europe, Asia, Australia, and South America.

Learn more at http://www.zendesk.com.

http://www.zendesk.com/


Organizations that used Zendesk Chat as a channel for engaging with customers found that an increased

number of customers spoke to agents and that the sales process required less time. One organization

shared that its typical customer conversation rate was 12%. The conversation rate for customers that

engaged over chat was 15.5%. Because executives were skeptical that merely using chat could impact

conversions so significantly, the management team ran repeated A/B tests to validate and confirm the

experience.

The customer service director told Forrester: “We did A/B testing,

so we basically randomly exposed chat 50% of the time in the

sales funnel. Based on staffing and volume, the chat option

popped up when we had available staff. That’s one of the great

things about Chat — you can hide or expose it based on staffing

availability, so people aren’t clicking to chat with you and then

waiting because agents are already tied up. But out of that 50/50

test that we did, we had 3.5% lift in conversions. Customers

realized that we were there to help and they interacted with us,

which allowed us to help and guide them through the purchase

process.”

Forrester excluded these results from the financial model because data is unique only to organizations

using chat during the sales process. Although excluded, the financial results of Forrester’s interviews are

shown in the table below. The model assumes:

› The organization began with a revenue stream of $15 million per year.

› Customer conversions before chat averaged 12%.

› Conversion rates lifted to 15.5% using chat.

› An average profit margin of 7%.

Three years of increased conversion rates resulted in an increased revenue of more than

$14 million and a total, present-value net profit of $830,455.

Because not all the companies that Forrester interviewed used chat as a channel for generating revenue,

Forrester reduced the value of this benefit by 15%. The risk-adjusted savings over three years totaled

$705,886.

Appendix A: Chat Boosts Customer Conversions

Chat increased

conversions by 29%

Incremental Profit Due To Increased Conversions By Interacting Over Chat


F1 Revenue from outbound customer interactions using traditional channels

10% per year $15,000,000 $16,500,000 $18,150,000

F2 Increased conversion rate using chat 3.5%/12% 29% 29% 29%

F3 Revenue from incremental conversions F1*F2 $4,350,000 $4,785,000 $5,263,500

F4 Average profit margin 7% 7% 7%

Ft Incremental Profit Due To increased conversions by interacting over chat

F3*F4 $304,500 $334,950 $368,445


Ftr Incremental Profit Due To increased conversions by interacting over chat (risk-adjusted)

$258,825 $284,708 $313,178


Appendix B: Total Economic Impact

Total Economic Impact is a methodology developed by Forrester

Research that enhances a company’s technology decision-making

processes and assists vendors in communicating the value proposition

of their products and services to clients. The TEI methodology helps

companies demonstrate, justify, and realize the tangible value of IT

initiatives to both senior management and other key business

stakeholders.

Total Economic Impact Approach

Benefits represent the value delivered to the business by

the product. The TEI methodology places equal weight on

the measure of benefits and the measure of costs, allowing

for a full examination of the effect of the technology on the

entire organization.

Costs consider all expenses necessary to deliver the

proposed value, or benefits, of the product. The cost

category within TEI captures incremental costs over the

existing environment for ongoing costs associated with the

solution.

Flexibility represents the strategic value that can be

obtained for some future additional investment building

on top of the initial investment already made. Having the

ability to capture that benefit has a PV that can be estimated.

Risks measure the uncertainty of benefit and cost estimates

given: 1) the likelihood that estimates will meet original

projections and 2) the likelihood that estimates will be

tracked over time. TEI risk factors are based on “triangular

distribution.”

The initial investment column contains costs incurred at “time 0” or at the

beginning of Year 1 that are not discounted. All other cash flows are discounted

using the discount rate at the end of the year. PV calculations are calculated for

each total cost and benefit estimate. NPV calculations in the summary tables are

the sum of the initial investment and the discounted cash flows in each year.

Sums and present value calculations of the Total Benefits, Total Costs, and

Cash Flow tables may not exactly add up, as some rounding may occur.

PRESENT VALUE (PV)

The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total NPV of cash flows.

NET PRESENT VALUE (NPV)

The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have higher NPVs.

RETURN ON INVESTMENT (ROI)

A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.

DISCOUNT RATE

The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.

PAYBACK PERIOD

The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.

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